Few retailers inspire customer loyalty quite like Costco.
The warehouse club has built its reputation on low prices, treasure-hunt shopping, generous return policies, and a steady stream of exclusive products under its popular Kirkland Signature private label.
Members willingly pay annual fees for access to the chain’s warehouses, and many shoppers view a Costco membership as an essential household expense.
That loyalty continues to show up in the company’s financial results.
In its third quarter 2026 earnings report, Costco said membership fee income climbed 10.7% year over year to $1.37 billion. The company also reported a U.S. and Canada membership renewal rate of 92.2%, while its worldwide renewal rate remained a robust 89.7%.
These numbers highlight just how satisfied most members remain with the Costco experience.
But even Costco has a weak spot.
A growing number of members say one of the most frustrating parts of shopping at Costco isn’t the crowded parking lots or long checkout lines. It’s finding out that an item they want is suddenly unavailable.
The one thing Costco doesn’t always get right
Out-of-stock products have become a major source of frustration for shoppers across retail. And Costco appears to be one of the chains most commonly associated with the problem.
Costco ranked among the retailers consumers most frequently complained about for out-of-stock items in the most recent Stockout Stigma Index from supply-chain software company DOSS.
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The survey also highlighted other major retailers, including Sephora, Trader Joe’s, and Target.
While stockouts are a problem throughout retail, they may be especially damaging for Costco because of its membership-based business model.
At Costco specifically, members are paying for access to products and bargains they can’t necessarily get elsewhere. When members make a special trip to a warehouse only to discover a favorite item is gone, the disappointment can feel greater than it would at a traditional retailer.
Retail experts have long warned that poor stock availability can hurt customer satisfaction and even erode loyalty over time. Consumers who repeatedly encounter empty shelves may choose to buy elsewhere or substitute competing products.
For Costco, that’s a notable challenge because recurring membership fees are one of the company’s most important profit drivers. Maintaining member satisfaction is critical to sustaining those strong renewal rates.
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Costco’s inventory strategy creates issues
Ironically, some of Costco’s inventory issues stem from the same strategy that helps make the retailer successful.
Unlike traditional supermarkets and big-box retailers, Costco intentionally carries a relatively limited selection of products.
The company focuses on a smaller number of stock-keeping units (SKUs), allowing it to buy in bulk, negotiate favorable pricing, and move inventory quickly.
Costco also regularly rotates merchandise in and out of warehouses. The approach creates the “treasure hunt” experience that many members enjoy, encouraging shoppers to buy products when they see them because they may not be available later.
The downside is that popular items can disappear without much warning. Sometimes a product is only temporarily out of stock. Other times it has been discontinued entirely or replaced by a different offering.
During Costco’s most recent earnings call, CFO Gary Millerchip said, “Our combination of merchandising quality, value, and newness continues to resonate with members.”
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But members can’t expect newness without seeing products disappear temporarily or permanently. That’s just the tradeoff of the Costco model.
For most members, the savings are worth the occasional frustration. But it remains one of the few complaints that even Costco’s most loyal customers continue to voice.
Maurie Backman owns shares of Costco.
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